Climate change causes $3.8 billion loss to Pakistani economy every year

 Pakistan 8th most vulnerable country to climate change

Climate change is worsening throughout the world and it may emerge as the next pandemic. While human lives and the planet are at risk, Pakistan’s economy has also been hit hard by the rising temperatures, sea level and pollution.

Pakistani economy bears $3.8 billion annual loss caused by climate change. In terms of economic costs at $3.8 billion, we are number three over a 20-year period. What this means is that our economy is constantly at risk from climate catastrophes and this is not just an environmental challenge but an issue impacting our economy, human health, agriculture and ecosystem.   

According to Global Climate Risk Index 2021, Pakistan is among the countries that are "recurrently affected by catastrophes [and] continuously rank among the most affected countries both in the long-term index and in the index for the respective year".

Pakistan has shown some progress on the climate change front since the PTI came into power. Pakistan was ranked 5th most vulnerable country to climate change on the Global Climate Risk Index in 2020. But in 2021 index it stands at 8th spot. There is still a long way to go to control the damage caused by climate change. Lot more needs to be done.

The data also indicates that the government, as well as the world, is not taking enough measures to cope with the challenges and risks that climate change poses to Pakistan, experts say.

The report clearly indicates that the world hasn’t acted, so the vulnerability of the whole world is increasing, and since Pakistan hasn’t acted, things are worsening for us too.

Former interim finance minister and governor State Bank of Pakistan and current chairman of Pakistan Stock Exchange Karachi has stressed the need to act on climate change in her speech at  “The Future Summit – What’s Coming Next”, she said that global uncertainties had increased following every episode of crisis since the 2008 economic and financial crisis.

The Covid-19 pandemic has been a rude awakening given the unprecedented loss of output and reversal of development gains witnessed throughout the world. “With the climate scenario worsening, the next looming crisis is to emanate from climate change,” she said.

Pakistan’s greenhouse gas emissions grew 50% with CO2 reaching 200 million tons in 2019. Energy and transport are the biggest emitters followed by the industry, agriculture and land practices. Air pollution is costing Rs50 billion, not to mention the health issues.

 Textile, Pakistan’s largest industry and exporter, is globally known to have contributed 6-8% of the emissions and 70% of it is attributed to the upstream energy-intensive material processing.

“In the wake of these threats and vulnerabilities, the cost of climate in action is going to be larger than the cost of climate action,” she said. “The share of public expenditure made to combat climate change is barely 6-7%.”

Only a segment of the corporate sector subscribes to sustainable reporting and a few of them are committed to zero emissions by 2030 and that happened during the COP26. However, no regulatory agency of Pakistan requires borrowers to follow climate disclosure.

So, future can be safeguarded by assigning priority to sustainability and recognising that meeting the needs of present without compromising the needs of future generation has high payoffs for nations. This also requires political and corporate leaders to have an eye on long term growth and probability to safeguard the planet and people. A host of measures, if adopted, could be game changer for Pakistan.

Fundamental amendments to policy, legal and regulatory frameworks should be introduced. “I hope we get them in order before the climate havoc falls on us,” she said. “We have to offer incentives to the industry to invest in safeguarding environment, ecology and biodiversity.”

Investment to GDP ratio has been very volatile in Pakistan. It has declined from 17.3% in fiscal year 2018 to 15.2% of GDP in 2021. “The low investment to saving is really the underlying cause of our historic unsteady and unsustainable growth path.”

“Of course Pakistan needs to double its investment to GDP ratio to 30% to enhance investment in sustainable climate resilient and inclusive infrastructure to protect our nature and ecology.”

                                                                    Web Desk

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